Billionaire investor Warren Buffett said Saturday that near-zero interest rates have completely changed the financial landscape, warning that the consequences of easy money policies remain an unanswered question.

As the COVID-19 pandemic gripped the United States last year, the U.S. central bank slashed interest rates to near zero and began aggressively absorbing assets to prevent another financial crisis.

Among the Federal Reserve’s purchases: government debt. Those actions allowed the Trump and Biden administrations to issue debt at lower rates, to finance the massive relief packages that sent trillions to households and businesses.

“It causes stocks to go up, it causes business to flourish, it causes an electorate to be happy, and we'll see if it causes anything else,” Buffett said at Berkshire Hathaway’s annual shareholder meeting, held virtually and exclusively live-streamed by Yahoo Finance.

The Fed has said it will hold steady on its easy policy until the recovery shows signs of substantial further progress.

Buffett said the effect of near-zero short-term interest rates has created an “incredible change in the valuation of everything” because of the reduced incentive to hold relatively risk-free government debt.

He illustrated the example of holding $100 billion in short-term Treasury bills (Buffett noted that Berkshire Hathaway holds more than that), which would now yield about $20 million at a yield of two basis points. Before the pandemic, Buffett said those holdings would have raked in about $1.5 billion a year.

“It’s been a sea change,” Buffett said. “It was designed to be that — that’s why the Fed moved the way they did, they wanted to give a massive push.”

That push has contributed to a run-up in higher yielding assets, from tech stocks to Special Purpose Acquisition Companies (SPACs).

Fed Chairman Jerome Powell said Wednesday that the broad run-up in market prices may be linked in part to the central bank’s easy money policies, but said optimism over getting to a post-pandemic world is the main driver.

Winners and losers?

For stocks, Buffett said low rates make stocks look like “bargains.” The reason: higher interest rates would comparatively erode more from a company’s cash flows.

“Interest rates are to the value of assets what gravity is to matter,” Buffett said, joking later that “if I could reduce gravity’s pull by about 80%, I'd be in the Tokyo Olympics jumping.”

Cheap borrowing costs also help the households and businesses hurt most by the pandemic, the same targets of fiscal relief measures.

Buffett’s long-time business partner, Charlie Munger, added during the meeting that lower rates may also narrow the inequality between younger and older generations.

“[They’re] going to have a hell of a time getting rates compared to our generation, so the differences between the rich and the poor in the generation that's rising is going to be a lot less,” Munger said.

The losers from low rates, according to Buffett, were banks that had to lower their interest rates on loans. In the depths of the pandemic, Berkshire sold holdings in banks like JPMorgan Chase (JPM) and Goldman Sachs (GS).

Buffett said Saturday he still likes banks “generally,” but wanted to reduce Berkshire’s exposure to the “possible risk” that he admits did not fully materialize.

“We'll see where it all leads, but Charlie and I consider it the most interesting movie by far we've ever seen, in terms of economics,” Buffett said.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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